Why Asset Management Hasn’t Been Regulated in US Towns and Cities Like in New Zealand

And I don’t know for sure if all of those folks really understand the benefits that the United States could achieve from doing asset management. – Heather Himmelberger

With reference to the crumbling water infrastructure of America, a participant asked the question “Why asset management hasn’t been regulated in US towns and cities like in New Zealand?”

Ross said that he doesn’t know much about American politics and mentioned that New Zealand regulated quite early, which was good.

He also cited Australia did asset management voluntarily and after a long time and all of the states are regulating now.

Ross continues:

What I simply realized, I think, people try to do things voluntarily and say, “Hey, this is a good idea.” And what you do is you get the top 20 percent, and they would be implementing asset management because it is good practice anyway.

Here in New Mexico, they’ve got a funding agency and they are actually making the funding conditional on asset management.

Maybe this is the way it’s going to happen in America where the funding agencies will say, “Hey, if you want the co-funding, then you’re going to have to demonstrate you’ve got the asset management in place so that we know that we are co-funding the right assets and the right work program.”

And I think the other thing is, maybe authorities that are raising bonds. I think if you have good asset management you could probably go to your bond rating agency and make a case that you’re managing very, very well and that might affect your bond rating.

You (the USA) are a country that doesn’t take to people forcing you to do things really, and there is some very strong historical precedent there. I think that might be the reason for the reluctance to regulate asset management.

Heather replies:

Yeah, I don’t think we take kindly to people telling us what to do. I also think, perhaps, part of the problem is the people – again the decision-makers – congress for example. We would take probably something in congress or something written in either the Safe Drinking Water Act or Clean Water Act to actually make it mandatory.

And I don’t know for sure if all of those folks really understand the benefits that the United States could achieve from doing asset management. And so it wouldn’t appear to them to be a good thing to do if they don’t really understand fully the benefits.

So, I’m kind of more of the opinion if we could even get the top 20 or 25 percent maybe we can push it down to 50 percent voluntarily.

If we could start having a bunch of stories to tell that, “Hey this isn’t being done because an outsider says it’s best.” And by outsider I mean like a regulatory agency or state or federal agency saying, “You have to do this.”

We’re doing this because it’s best for us, the water and waste water systems that are doing it. And we’re doing asset management because we achieved the benefits ourselves.

I think if we could get enough good stories to tell down the road, maybe they may have to mandate it to get the other, 50 or 60 percent that won’t do it without a mandate.

But hopefully we can get maybe some better, more examples, and people really seeing the value in the voluntary world. Then maybe someday there would be a mandate.

My only caution on the mandate side is, I always caution, or fear I guess is the right word, that the mandate for asset management won’t be done properly.